Early stage companies find the C-Corp structure appealing because: C-Corps limit the liability of investors and firm owners. The most an investor can lose if the business were to fail is what they have invested into the business.C-Corps can issue different types of equity instruments such as convertible … Read More
It is possible to challenge / dispute the IRS’s determination regarding the eligibility of your business. For example, in a ruling letter issued on May 22, 2014, Ruling 201436001, the IRS examined whether a corporation which provides products and services primarily in connection with the pharmaceutical industry, helping to … Read More
To qualify as being able to issue QSBS stock, the corporation needs to be developing or producing a product for businesses or consumers. If the principal asset of the corporation is the skill or reputation of one or more employees than the corporation does not qualify for … Read More
Many companies are asked to represent that their stock qualifies as QSBS before the stock is issued. If so, there may be a clause in your “Stock Purchase Agreement” or related purchase documents where the corporation stated that: “aggregate gross assets, as defined by Section 1202(d)(2) of the … Read More
Business valuations are conducted on fair market value (FMV) basis, which means “the price at which property would change hands between a willing buyer and a willing seller, neither acting under compulsion to buy or to sell, both being able and willing to trade, both being well-informed … Read More
Not sure if the stock you’re invested in is QSBS, learn more about our QSBS Monitoring Platform Aggregate gross assets include: CashAggregate adjusted basis of other property held by the corporation. (Section 1202(d)(2)) QSBS considers the tax basis of assets, which are generally reported on Schedule L of a corporation’s tax … Read More
Not sure if the stock you’re invested in is QSBS, learn more about our QSBS Monitoring Platform Many actions or decisions companies routinely make can jeopardize qualified small business stock (QSBS) status. Suppose after starting your company and qualifying for all of the criteria for QSBS, you meet Charlie, … Read More
The QSBS “Active Business Requirement” requires that “at least 80 percent (by value) of the assets” of the corporation are used in the “active conduct of one or more qualified trades or businesses1 during substantially all of the taxpayer’s holding period for such stock” (Section 1202 (2)(A)). … Read More
The purpose of this case study is to give a real-world example of the potential benefits of the Section 1202 qualified small business stock (QSBS) exclusion on a QSBS holder and tax revenue level. Below is the QSBS Company Profile for Beyond Meat ("the Company" or "BM") … Read More
In order to qualify as a “Qualified Small Business”, Section 1202 requires that the corporation to be in a “qualified trade or business.” The general intent of the QSBS tax exclusion is to incentivize investment in entrepreneurship of innovative companies to help drive future economic growth. Example of … Read More